CAC makes transparency a top priority

New policies in place after audit

SAN ANGELO, Texas - Adding checks and balances to financial practices and demonstrating transparency has become a priority at the Children's Advocacy Center of Tom Green County.

After a forensic audit shed light on financial practices that were being circumvented within the CAC, the agency made some changes — hiring a new office manager who shares day-to-day operations with the executive director, asking an executive committee board member to open bank statements and imposing stricter reimbursement practices.

The agency's executive director, Debra Brown, left under a cloud in March after the audit showed irregularities that included questionable reimbursements amounting to $66,000. The CAC turned the audit over to the FBI.

Changes have been made inside the organization, said Heather Ward, who replaced Brown as executive director. Program directors are asked to attend board meetings. All executive director reimbursements are approved by a member of the executive committee. Expenses are now charged to specific grant contracts, not just to one of the agency's three programs.

Staff at the center hope these changes, coupled with a more attentive eye from the center's board of directors, will minimize the potential for financial problems.

A forensic audit has little in common with the procedural audits that are done annually, agency representatives pointed out.

"We pay for an audit every year for the entire agency," Ward said. "It's passed every year."

Michelle Perkey, a certified public accountant with Oliver Rainey & Wojtek LLP, said auditors in the annual process look to verify the actual assets and liabilities of a company. Theirs is not the duty or responsibility to detect fraud.

Depending on the size of the organization, and how well organized its documents are, an external financial audit can take anywhere from two days to several weeks.

A forensic audit is more thorough and looks specifically for fraud, she said.

Perkey, who also is vice president of the CAC's executive board, said nonprofit organizations want a diversity of talents and skills in board members, including someone who understands finances. She believes it's the board members' responsibility to want to know about the agency and how it runs.

Even then, members don't always know what they're going to get, such as an internal crisis that casts public doubt on the agency's ability to run itself.

"You definitely don't sign up and volunteer for an organization thinking that this is something you're going to have to go through," Perkey said.

According to the audit's executive summary it was possible that Brown "benefitted personally by processing expense reimbursement forms that included personal as well as fictitious items."

Brown could not be reached for comment for this story and has not returned messages in connection with previous stories on the issue.

Because the CAC is an umbrella organization, each of its threeprograms are operated differently and are mostly funded through separate contracts and grants. Ward believes the damage to funding of the scandal might be minimal.

"We have been given no indication that our funding will be cut. In fact, our funders have been very supportive," she said in an email Friday. "However, it is early on, and I can't answer that question with complete certainty. We will continue to serve children, and will continue to need volunteers and financial support from our community."

Internal policies

Teresa Huizar, National Children's Alliance executive director, said all children's advocacy centers are expected to have adequate internal control and financial management policies and procedures.

In terms of internal control and separating duties, many organizations struggle — especially small agencies. Huizar said it's not uncommon for board members of nonprofits to be "trusting and naive" and assume everyone who works for a nonprofit does so "for all the right reasons and for the very best of intention."

Financial mismanagement can take two forms, the most common being a lack of knowledge, she said, which can be solved by hiring an assistant or contracting help. The greater challenge is if the agency hired someone who takes advantage of policies and misuses funds or otherwise skirts around ethical behavior.

Huizar said a way to prevent that is by creating clear financial policies and procedures and then making sure they're followed.

Ward said state and federal funding organizations — including Texas Court Appointed Special Advocates, Children's Advocacy Centers of Texas and National Children's Alliance — send grant auditors each year to examine how their money was spent, but the granting agencies have never looked at the center's entire budget, only the parts of it representing their specific interests.

Joy Rauls of Children Advocacy Centers of Texas Inc. said in an email that the agency is reviewing the findings and documents in the auditor's report for the Tom Green County CAC.

"The board and staff of the CAC have responded swiftly in light of these developments and have been taking all necessary steps to remedy this situation," Rauls said in the email.

Rauls pointed out that there has been no decline in the number of clients served or the quality of services provided to children at Hope House — a program that combines representatives from law enforcement, Child Protective Services, district attorney's office and medical personnel to serve abused and neglected children.

In 2010 there were 527 confirmed victims of child abuse and neglect in Tom Green County, according to the Texas Department of Family and Protective Services. In 2009, Tom Green County reported 516 confirmed victims of child abuse and neglect — an increase of 38percent from 373 confirmed cases in 2008.

In light of this trend, Ward said, helping abused children remains the agency's primary mission.

"We're so dedicated to the children we serve and know the impact we make in the community," Ward said, "and that's really what's gotten us through this."